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Why Target failed in its attempt to be both a high end and discount store with 75 of them to close

For many years, there was a running joke that Target was really pronounced ‘Tar-jay’ with a French accent.

It was the department store popular TV characters Kath and Kim might pop down to at Fountain Lakes so they could challenge the perception they were financially and stylistically-challenged bogans from the outer suburbs of Melbourne. 

Target, despite being a discount store, had always tried to position itself as a slightly more upmarket alternative to Kmart or Big W, holding designer Stella McCartney’s ‘sustainable’ textiles range to appear fashionable and environmentally woke. 

In the end, consumers opted for Kmart, which is unambiguously a discount store, with its sales more resilient than Target during an economic downturn. 

Times have changed in Australia and beyond.

For many years, there was a running joke that Target was really pronounced ‘Tar-jay’ with a French accent. Pictured is the Broadway store at Glebe in Sydney’s inner-west on May 22, 2020 

Times have changed in Australia and beyond - no one cares if they are judged for chasing bargains. On the day Westfarmers announced it was closing 75 Target stores, Kmart was selling toasters for $15

Times have changed in Australia and beyond – no one cares if they are judged for chasing bargains. On the day Westfarmers announced it was closing 75 Target stores, Kmart was selling toasters for $15 

Target by comparison was selling toasters for $25, adding to the perception it was more dearer than Kmart

Target by comparison was selling toasters for $25, adding to the perception it was more dearer than Kmart

Very few shoppers care if they are judged for chasing bargains, and shunning the traditional prestige department stores like Myer and David Jones.

What will happen to Target?

Parent company Wesfarmers is closing 75 stores, including 25 larger ones and 50 country outlets

The remaining 92 Target stores will be converted into Kmarts, including 40 large stores and 52 country outlets 

Some Target Country stores will be turned into smaller Kmart Hub outlets 

Changes are occurring during the next 12 months, the majority in 2021 

Kmart Group setting aside $120million to $170million in restructuring costs to reflect Target store closures and conversions 

Source: Wesfarmers announcement to the Australian Securities Exchange, May 22, 2020 

The rise of German supermarket brand Aldi and its popularity among well-to-do baby boomers demonstrates that fact pretty clearly. 

Bunnings also has the hardware space to itself, after Woolworths’s Masters Home Improvement experiment failed because customers thought it was too trendy for those simple DIY projects. 

So it’s no surprise retail conglomerate Wesfarmers is closing up to 75 Target stores and converting 92 remaining ones into Kmarts during the next 12 months.

On the day of the announcement, Kmart was selling toasters for $15 – $10 less than Target.

Target was also selling microwaves for $69, compared with $48 at Kmart, adding to the perception it was much more expensive.

A Kmart store at Broadway in Sydney’s inner-west was also busy as a nearby Target was quiet. 

IBISWorld senior industry analyst Daisy Feller said Target’s attempt to be a more upmarket discount store had confused potential customers.

Kmart, which is unambiguously a discount store, with its sales more resilient than Target during an economic downturn. The Kmart store at Broadway in Sydney (pictured) was much busier than a nearby Target

 Kmart, which is unambiguously a discount store, with its sales more resilient than Target during an economic downturn. The Kmart store at Broadway in Sydney (pictured) was much busier than a nearby Target 

Target, despite being a discount store, had always tried to position itself as a slightly more upmarket alternative to Kmart or Big W. Pictured is a Kmart at Broadway

Target, despite being a discount store, had always tried to position itself as a slightly more upmarket alternative to Kmart or Big W. Pictured is a Kmart at Broadway

‘Target was still trying to hit that everyday, very accessible market while being high fashion – it is confusing to people,’ she told Daily Mail Australia.

‘You don’t know where you fit in your life.’

Target’s collaboration with Stella McCartney, the daughter of Beatles lead singer and songwriter Paul McCartney, probably turned off the penny-pinching shopper.

‘They’re initiatives with Stella McCartney that are almost trying to position themselves higher-end while simultaneously hitting that discount segment,’ Ms Feller said.

When it came to saving money, consumers just preferred a discount store that didn’t pretend to be anything else by choosing Kmart and shunning Target.

‘Consumers have been preferring something that markets itself as purely discount rather than both high-end and discount at the same time,’ Ms Feller said.

IBISWorld senior industry analyst Daisy Feller said Target's attempt to be a more upmarket discount store had confused potential customers. Pictured is a near-empty Target store at Broadway

IBISWorld senior industry analyst Daisy Feller said Target’s attempt to be a more upmarket discount store had confused potential customers. Pictured is a near-empty Target store at Broadway

Target was also selling microwaves for $69, compared with $48 at Kmart, adding to the perception it was much more expensive

Target was also selling microwaves for $69, compared with $48 at Kmart, adding to the perception it was much more expensive

Kmart managing director Ian Bailey said Target would be downsized with 'a smaller number of stores and a stronger online business'. Pictured is Kmart at Broadway

Kmart managing director Ian Bailey said Target would be downsized with ‘a smaller number of stores and a stronger online business’. Pictured is Kmart at Broadway

CONFIRMED TARGET STORES CLOSING 

 NSW:  

Armidale, early-mid 2021

Campbelltown, July 2020

Cooma, early-mid 2021

Cootamundra, early-mid 2021

Corowa, early-mid 2021

Deniliquin, early-mid 2021

Forbes, early-mid 2021

Leeton, early 2021

Merimbula, early-mid 2021

Morisset, early-mid 2021

Narrabri, early-mid 2021

Nowra, early-mid 2021

Salamander Bay, early-mid 2021

Scone, early-mid 2021

Wagga Wagga, early-mid 2021

Winmalee, early-mid 2021

 VIC:  

Bacchus Marsh, early-mid 2021

Bairnsdale, early-mid 2021

Benalla, mid 2021

Colac, early-mid 2021

Kerang, early-mid 2021

Langwarrin, early-mid 2021

Maryborough, early-mid 2021

Myrtleford, early-mid 2021

Traralgon, early-mid 2021

Warragul, early-mid 2021

 ACT:

Weston Creek, early-mid 2021 

 QLD:  

Atherton, early 2021

Beaudesert, early-mid 2021

Biloela, early 2021

Casino Retail Centre, early-mid 2021

Clifton Beach, early-mid 2021

Emerald, early-mid 2021

Goonellabah, early 2021

Kippa Ring, early 2021

Longreach, early-mid 2021

Moranbah, early-mid 2021

Murgon, early-mid 2021

Murwillumbah, early 2021

 WA:

Busselton, early 2021

Karratha, early-mid 2021

Kununurra, early-mid 2021

Manjimup, early-mid 2021

Margaret River, early-mid 2021

Meadow Springs, August 2020

Merredin, early-mid 2021

Narrogin, early-mid 2021

 SA

Clare, early-mid 2021

Millicent, early 2021

Naracoorte, early-mid 2021

Pasadena, June 2020

Port Lincoln, early 2021

TAS:

Devenport, early-mid 2021 

Wesfarmers managing director Rob Scott admitted Target was a weak link as he announced on Friday the closure of 75 Target stores.

‘For some time now, the retail sector has seen significant structural change and disruption and we expect this trend to continue,’ he told the Australian Securities Exchange on Friday.

‘With the exception of Target, Wesfarmers’ retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption.’

Westfarmers, which also owns Bunnings and Officeworks, told the ASX it wanted to address the ‘unsustainable financial performance of Target’.

Kmart managing director Ian Bailey said Target would be downsized with ‘a smaller number of stores and a stronger online business’. 

Ms Feller said the Target name could disappear altogether.

‘It’s possible they will phase it out completely,’ she said.

In the the end, consumers opted for Kmart, which is unambiguously a discount store, with its sales more resilient than Target during an economic downturn. Pictured is a Target jacket selling for $39 in downtown Sydney

In the the end, consumers opted for Kmart, which is unambiguously a discount store, with its sales more resilient than Target during an economic downturn. Pictured is a Target jacket selling for $39 in downtown Sydney

Westfarmers, which also owns Bunnings and Officeworks, told the ASX it wanted to address the 'unsustainable financial performance of Target'. Pictured is a jacket selling for $20 at Kmart, almost half the price of one at Target

Westfarmers, which also owns Bunnings and Officeworks, told the ASX it wanted to address the ‘unsustainable financial performance of Target’. Pictured is a jacket selling for $20 at Kmart, almost half the price of one at Target

Ironically, Target could survive as the small band of remaining stores into stores that were unambiguously upmarket.

‘That’s definitely a possibility. That would help the problem of confusing brand positioning – consumers would view them as a completely different store to Kmart rather than just a different Kmart,’ Ms Feller said. 

Mark Schiavello, the national leader of retail with business consultancy BDO, said Australian consumers were likely to prefer discount retailers in their local area as coronavirus restrictions were unwound.

‘As life returns to a new normal, people will start to spend again but their behaviour will shift from making prestige purchases to practical, everyday items,’ he told Daily Mail Australia.

‘Retailers should expect that the majority of people will be budget-conscious for some time to come as the effects of the pandemic are still felt in our society.

‘Shopping locally is going to make a big come-back post COVID.’

Target employees will be given the opportunity to be employed in the converted Kmart stores or in other parts of the Wesfarmers group. Pictured is a Kmart store at Broadway

 Target employees will be given the opportunity to be employed in the converted Kmart stores or in other parts of the Wesfarmers group. Pictured is a Kmart store at Broadway 

Mark Schiavello, the national leader of retail with business consultancy BDO, said Australian consumers were likely to prefer discount retailers in their local area as coronavirus restrictions were unwound. Pictured is Kmart at Broadway in Sydney

Mark Schiavello, the national leader of retail with business consultancy BDO, said Australian consumers were likely to prefer discount retailers in their local area as coronavirus restrictions were unwound. Pictured is Kmart at Broadway in Sydney

TARGET STORES CONVERTED TO KMART STORES 

 NSW:

Bega, early-mid 2021

Bowral, early 2021

Gunnedah, early 2021

Katoomba, early 2021

Moree, early 2021

Mudgee, early 2021

Picton, early 2021

Tumut, early 2021

Ulladulla, early 2021

Windsor Town S/C, early 2021

Yass, early 2021

 QLD:

Ayr, early-mid 2021

Beerwah, early-mid 2021

Bowen, early 2021

Charters Towers, early 2021

Chinchilla, early 2021

Dalby, early 2021

Gatton, early 2021

Goondiwindi, early 2021

Gympie, early 2021

Ingham, early 2021

Mareeba, early 2021

Noosa Junction, early 2021

Ocean Shores Village Ctr, early 2021

Port Douglas, early 2021

Roma, early 2021

Sarina, early 2021

Stanthorpe, early 2021

Warwick, early 2021

Yamba, early 2021

Yeppoon, early 2021

 VIC:

Ararat, early-mid 2021

Castlemaine, September 2020

Cobram, July 2020

Echuca, July 2020

Hamilton, early 2021

Kyabram, September 2020

Lakes Entrance, early 2021

Leongatha, early 2021

Mansfield, early 2021

Portland, early 2021

Seymour, early 2021

Woodend, September 2020

Yarrawonga, early 2021

 SA:

Berri, early 2021

Murray Bridge, early 2021

Port Augusta, early 2021

Victor Harbour, early 2021

WA:

Esperance, early 2021

Geraldton, early-mid 2021

Northam, early 2021

Pinjarra, early 2021

 NT:

Katherine, early 2021

Target employees will be given the opportunity to be employed in the converted Kmart stores or in other parts of the Wesfarmers group. 

‘All team members in Target stores scheduled for conversion to Kmart will be offered the opportunity to join the growing Kmart team, for other affected Target team members, we will work with them to identify and offer other redeployment opportunities in Kmart, Catch, Bunnings and Officeworks as these businesses continue to grow,’ a spokeswoman said.

Australia’s retail sector is still in a state of difficulty with sales plunging by a record 17.9 per cent in April, following a record 8.5 per cent in March as shoppers hoarded toilet paper, pasta and rice before the coronavirus lockdowns.

Being fashionable is hardly in vogue when it comes to shopping during the worst economic crisis since the 1930s Great Depression. 

Target employees will be given the opportunity to be employed in the converted Kmart stores or in other parts of the Wesfarmers group

Target employees will be given the opportunity to be employed in the converted Kmart stores or in other parts of the Wesfarmers group

Despite being a discount store, Target tried to position itself as upmarket, by selling fashion designer Stella McCartney's 'sustainable' textiles to bring in the ethically-minded shoppers

Despite being a discount store, Target tried to position itself as upmarket, by selling fashion designer Stella McCartney’s ‘sustainable’ textiles to bring in the ethically-minded shoppers

Target was the kind of place Kath and Kim might pop down to at Fountain Lakes, without wanting to admit they were budget-conscious bogans in the outer suburbs. Pictured are comedians Jane Turner and Gina Riley as mum Kath Day-Knight with her daughter Kim

Target was the kind of place Kath and Kim might pop down to at Fountain Lakes, without wanting to admit they were budget-conscious bogans in the outer suburbs. Pictured are comedians Jane Turner and Gina Riley as mum Kath Day-Knight with her daughter Kim

Read more at DailyMail.co.uk


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